Doubters Take Aim at Shell’s Arrow LNG Plan

By

Ross Kelly

Nov 27, 2012 5:13 pm EDT

Doubts over Royal Dutch Shell and PetroChina’s desire to go it alone with a fourth liquefied natural gas plant in Australia’s Queensland state are gaining traction.

Investors and analysts increasingly are questioning whether the pair’s plan for a standalone Arrow Energy development at Gladstone makes financial sense, following cost blowouts at rival projects nearby. Shell and PetroChina acquired Arrow Energy in a 3.4 billion Australian dollar (US$3.56 billion) transaction in 2010, and are targeting a decision on construction late next year.

Goldman Sachs analyst Mark Wiseman is the latest to suggest alternatives to Shell and PetroChina’s existing plan for a new facility producing up to 18 million tons of LNG annually for export.

“It may make sense for Arrow to consolidate with, or sell gas in to one of the existing LNG terminals,” Mr. Wiseman says.

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